Mar 13, 2014
The Canadian Press

CALGARY – The Alberta cabinet has approved the Dover oilsands project, one of the last hurdles Athabasca Oil Corp. (TSX:ATH) must clear before it can sell its 40 per cent interest to a Chinese partner.

The news comes weeks after a nearby aboriginal band agreed to drop a lawsuit challenging the Alberta Energy Regulator’s green-light of the project.

“The approval process has been long but we have achieved the expected outcome,” said Athabasca CEO Sveinung Svarte. “We now look forward to finalizing the approvals for the project, including receipt of the Alberta Environment approval.”

Desjardins analyst Justin Bouchard said it won’t be long before Athabasca gets a much-needed cash infusion.

“Athabasca now awaits environmental approval, which usually occurs within two to four weeks of receiving the order in council,” he said in a research note.

“Once environmental approval is received, Athabasca can trigger the Dover put/call option with PetroChina within a 30-day window, selling its remaining interest in the project and bringing in $1.3 billion in proceeds; we expect the cash to be received within the next eight to 10 weeks.”

A similar process took place in 2012 for the McKay River oilsands project, with PetroChina opting to buy Athabasca’s stake for $680 million, making it the first oilsands project to be fully controlled by the Chinese.

The proposed five-phase Dover project aims to eventually produce 250,000 barrels of crude a day using steam-assisted gravity drainage technology.

The Fort McKay First Nation wanted a 20-kilometre buffer zone around the project, but the Alberta Energy Regulator denied the request and approved the Dover project last August.

In October, the band won the right to challenge the AER approval on constitutional grounds. It dropped its lawsuit last month.

Alvaro Pinto, the band’s director of sustainability, said the Dover partners have agreed to environmental protections for an area the band was most concerned about.

Pinto said the agreement included a financial component as well as promises of business opportunities.